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SPH vs. CAPL: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Oil and Gas - Refining and Marketing - Master Limited Partnerships sector might want to consider either Suburban Propane Partners, L.P. (SPH) or CrossAmerica Partners (CAPL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Suburban Propane Partners, L.P. is sporting a Zacks Rank of #2 (Buy), while CrossAmerica Partners has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SPH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SPH currently has a forward P/E ratio of 19.21, while CAPL has a forward P/E of 21.71. We also note that SPH has a PEG ratio of 4.80. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CAPL currently has a PEG ratio of 6.38.

Another notable valuation metric for SPH is its P/B ratio of 2.49. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CAPL has a P/B of 4.60.

These metrics, and several others, help SPH earn a Value grade of A, while CAPL has been given a Value grade of C.

SPH stands above CAPL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SPH is the superior value option right now.


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Suburban Propane Partners, L.P. (SPH) : Free Stock Analysis Report
 
CrossAmerica Partners LP (CAPL) : Free Stock Analysis Report
 
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